After opening higher, the S&P 500 e-mini futures (ES) have pulled back into yesterday's trading range, accompanied by strengthening of the U.S. dollar, weakening of oil prices, and a dip in 10-year Treasury yields. It's when we see the asset classes move in tandem that we can recognize the impact of thematic trades in the market, as pro-risk sentiment gives way to a measure of risk aversion. The selling was significant--only 27 stocks separate advancing issues from decliners--and, in my basket, only 10 stocks are up from the open and 30 are down. Selling is particularly strong among small caps and among such economically sensitive sectors as consumer discretionary shares. With the rejection of the early morning highs (and the test of the bull highs), we may be setting ourselves up for a range bound consolidation.
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